# Dismissal Protection After Removal as Managing Director > The BAG clarifies that § 14 KSchG does not apply if removal occurs before notice is received; general dismissal protection may apply. Source: https://www.mtrlegal.com/en/dismissal-protection-after-removal-as-managing-director/ · Language: en · Updated: 2026-10-21 --- ## BAG strengthens dismissal protection after removal as managing director The [Bundesarbeitsgericht (BAG, Federal Labour Court) held in its judgment](https://www.bundesarbeitsgericht.de/entscheidung/2-azr-89-25/) of 18 June 2026 – 2 AZR 89/25 – that [§ 14 Abs. 1 Nr. 1 KSchG (German Protection Against Dismissal Act)](https://www.gesetze-im-internet.de/kschg/__14.html) does not apply if the corporate office no longer exists at the time the notice of termination is received. The defendant’s appeal on points of law against the judgment of the Hessisches Landesarbeitsgericht (Hessian Higher Labour Court) of 28 February 2025 – 14 SLa 578/24 – was unsuccessful. The defendant must bear the costs of the appeal proceedings. The full text of the decision was made available on 13 October 2026. It bears the identifier ECLI:DE:BAG:2026:180626.U.2AZR89.25.0. The court of first instance was the Arbeitsgericht Darmstadt (Darmstadt Labour Court), with a partial judgment of 2 May 2024 – 8 Ca 153/23. In the sequence of instances, proceedings before the Arbeitsgericht Darmstadt of 16 July 2025 – 5 Ca 271/24 – are also noted as otherwise disposed of. ## Dispute over ordinary termination after removal ### Contractual basis and appointment as managing director The claimant was employed by the defendant on the basis of a contract dated 31 March 2021. The employment relationship was intended to commence on 1 April 2021. At the same time, the parties agreed that service with other group companies since 16 October 1995 would be credited. In the introductory sentence, the contract was expressly described as an employment contract. The contract, headed as a service agreement, provided that the claimant was being hired as managing director for the defendant. The contract also stipulated that the claimant was to be obliged to take on other reasonable and equivalent duties; the defendant reserved the right to assign other tasks in this respect. The contract contained a separate provision regarding the managing director role. According to that provision, the claimant was to act, with his agreement and at the request of the group management, as managing director at the company or at another group company. The contract did not establish any entitlement to the transfer of a managing director position. ### Removal before receipt of the termination notice The claimant was appointed managing director with effect from 21 May 2021. On 8 November 2022, the defendant informed him that it would remove him as managing director. In any event, from the end of 2022 onward, the claimant no longer performed any managing director duties. By resolution of 1 February 2023, the shareholders’ meeting revoked the claimant’s appointment as managing director with immediate effect. Only several months later, by letter dated 28 June 2023, [the defendant terminated the service agreement](https://www.mtrlegal.com/regions/darmstadt/kuendigung-geschaeftsfuehrer/) with effect as of 31 December 2023, alternatively as of the next possible date. The claimant received the termination letter on the same day. The termination was signed by the defendant’s HR Director. Enclosed with the letter was a resolution of the shareholders’ meeting authorising the HR Director to terminate the service agreement with the claimant. ## Parties’ positions in the dismissal protection proceedings ### Claimant relied on the Protection Against Dismissal Act The claimant filed an action against the termination in due time. He argued that the dismissal required social justification, which was not present. According to the wording of the contract and the way it had actually been performed, an employment relationship existed between him and the defendant. In the claimant’s view, he was entitled to rely on dismissal protection under § 1 KSchG. At the time the termination notice was received, he had already not been the defendant’s managing director for more than five months. For that reason, § 14 Abs. 1 Nr. 1 KSchG did not apply. The claimant also asserted further grounds for invalidity. He took the view that the termination had been issued by a corporate body that lacked competence. In addition, the works council had not been involved in accordance with § 102 BetrVG (German Works Constitution Act). ### Defendant denied any duty of social justification The defendant applied for dismissal of the action. It took the view that the termination did not have to be socially justified. An employment relationship had neither been agreed nor actually performed. Irrespective of this, the defendant considered § 1 KSchG to be inapplicable due to § 14 Abs. 1 Nr. 1 KSchG. The termination concerned solely the contractual relationship underlying the corporate office. ## Decisions of the lower courts ### Labour Court assumed termination only at a later date The Arbeitsgericht upheld the claim in part, insofar as relevant to the appeal on points of law. It found that an employment relationship existing between the parties had ended only on 31 January 2024. It dismissed the claim in all other respects. The Arbeitsgericht therefore proceeded, for the part relevant to the decision, on the basis that an employment relationship existed between the parties. The defendant did not file an appeal against this partial finding. ### Higher Labour Court upheld the dismissal protection application in full On the claimant’s appeal, the Hessisches Landesarbeitsgericht amended the first-instance decision. It upheld the dismissal protection application in full. The Landesarbeitsgericht (Higher Labour Court) thereby found that the employment relationship had not been terminated by the notice of 28 June 2023. By its appeal on points of law, the defendant sought to have the first-instance decision restored. The Bundesarbeitsgericht dismissed the appeal in its entirety. ## No application of § 14 Abs. 1 Nr. 1 KSchG ### The decisive point in time is receipt of the termination notice The Bundesarbeitsgericht clarified that the defendant’s termination of 28 June 2023 is legally invalid under § 1 Abs. 1 KSchG. In the case at issue, the application of § 1 KSchG was not excluded by § 14 Abs. 1 Nr. 1 KSchG. Under § 14 Abs. 1 Nr. 1 KSchG, the provisions of the First Section of the Kündigungsschutzgesetz do not apply, in the establishments of a legal entity, to members of the body appointed to legally represent that legal entity. This provision removes certain corporate representatives from general dismissal protection. According to the case law of the Bundesarbeitsgericht, what matters is whether the corporate office still exists at the time the termination notice is received. If the corporate office ends only after receipt of the termination notice, § 14 Abs. 1 Nr. 1 KSchG generally remains applicable. If, by contrast, the corporate office no longer exists when the termination notice is received, the provision does not apply. ### Wording and statutory structure support a narrow interpretation The Bundesarbeitsgericht derived this understanding from the interpretation of the provision. The wording alone indicated that § 14 Abs. 1 Nr. 1 KSchG is temporally linked to the existence of the corporate office. The phrase “is appointed” refers to a present state of affairs and not to the fact that a person was once previously appointed to represent the legal entity. In the Senate’s view, the provision also relates to a specific group of persons. It does not remove a particular contractual relationship, but rather members of corporate bodies personally, from general dismissal protection. In the Bundesarbeitsgericht’s view, an interpretation focusing on the contractual relationship underlying the corporate office had no basis in the wording of the provision. From a systematic perspective, the Senate emphasised that § 14 Abs. 1 Nr. 1 KSchG is an exception. Under general principles, exceptions are generally to be interpreted restrictively. This, too, supported a narrow understanding of the provision. ## Purpose of the provision: corporate office as the decisive criterion ### Corporate representatives act on behalf of the legal entity In the Bundesarbeitsgericht’s view, the purpose of the provision confirmed this result. Persons who, by virtue of their corporate office, form the will of the legal entity and can act on its behalf are not to fall under general dismissal protection because of this special status. When the corporate office ceases, this special legal status also ceases. A person who is no longer appointed to represent the legal entity can neither form its will as a corporate body nor act externally on its behalf in that function. At the same time, the Bundesarbeitsgericht clarified that a lack of need for social protection is not the decisive reason for exclusion under § 14 Abs. 1 Nr. 1 KSchG. Rather, the decisive factor is the legal position associated with the corporate office. ### No distinction based on the “employer camp” The defendant argued that the decisive question should be whether and when a managing director leaves the so-called employer camp. The Bundesarbeitsgericht did not follow this. In the Senate’s view, such a distinction would be associated with considerable uncertainty. Moreover, § 14 Abs. 2 KSchG shows that belonging to the employer camp is not decisive. The persons mentioned there are also typically associated with employer functions, without this, according to the legislature’s intent, excluding the application of the First Section of the Kündigungsschutzgesetz. ## Significance of the chronological sequence ### Company can usually determine the sequence itself The Bundesarbeitsgericht also addressed the objection that focusing on the time of receipt of the termination notice could lead to arbitrary results. In the Senate’s view, this objection did not alter the interpretative result. Where a company intends to end both the corporate office and the contractual relationship, it usually has control over the timing. It decides when it revokes the appointment and whether it issues the termination before or after the removal. In the case decided, the decisive factor was that the defendant had already removed the claimant by shareholders’ resolution of 1 February 2023. The claimant did not receive the termination notice until 28 June 2023. At that time, the claimant was therefore no longer a corporate body appointed to represent the defendant. ### Possible limit in cases of abusive conduct At the same time, the Bundesarbeitsgericht indicated that a different assessment may be conceivable if a managing director resigns from office in order to obtain general dismissal protection in the event of an impending termination. In such an individual case, reliance on general dismissal protection may be denied under § 242 BGB (German Civil Code). The Senate also noted that the company is generally free to conclude with a managing director an independent service contract under § 611 BGB instead of an employment contract within the meaning of § 611a BGB. In that case, the scope of application of the Kündigungsschutzgesetz would already not be opened for that reason. ## Employment relationship existed between the parties ### Finality of the first-instance finding had to be observed The Bundesarbeitsgericht assumed that an employment relationship within the meaning of § 611a BGB existed between the parties. The Landesarbeitsgericht had assumed this without any error of law. In its decision partially upholding the claim, the Arbeitsgericht had found that the employment relationship existing between the parties had not been terminated by the termination at issue before 31 January 2024. The defendant did not lodge any appeal against this finding. It had therefore become final to that extent. The Landesarbeitsgericht was therefore entitled to regard itself as bound by the finding of an employment relationship. In the Bundesarbeitsgericht’s view, this gave rise to no concerns under the law governing appeals on points of law. ### Contractual descriptions additionally supported an employment relationship Irrespective of finality, the Bundesarbeitsgericht relied on the fact that the parties had repeatedly described their legal relationship in the contract of 31 March 2021 as an employment relationship. The contract itself was described as an employment contract, and the claimant as an employee. Where there is such a contractual classification, an employment relationship is generally to be assumed. In the case at issue, this applied at least in addition to the binding finding from the first instance. ## Termination was socially unjustified ### No social justification asserted Since § 1 KSchG was applicable, the ordinary termination required social justification. The termination was socially unjustified under § 1 Abs. 2 KSchG. The defendant had not relied on any social justification. According to the findings of the Bundesarbeitsgericht, no such justification was apparent either. It therefore remained the case that the employment relationship had not been terminated by the notice of 28 June 2023. The further grounds for invalidity asserted by the claimant were therefore no longer relevant. The Bundesarbeitsgericht consequently did not have to decide whether the termination had been issued by a corporate body lacking competence or whether involvement of the works council under § 102 BetrVG was absent. ## Key points of the decision The decision of the Bundesarbeitsgericht can be summarised in several points: - § 14 Abs. 1 Nr. 1 KSchG requires that the corporate office still exists at the time the termination notice is received. - If the managing director has already been removed before receipt of the termination notice, the application of § 1 KSchG is not excluded by § 14 Abs. 1 Nr. 1 KSchG. - The provision is linked to the person as a member of a corporate body, not to the contractual relationship underlying the corporate office. - As an exception, § 14 Abs. 1 Nr. 1 KSchG must generally be interpreted narrowly. - Where a company wishes to terminate both the corporate office and the contractual relationship, the company can usually structure the sequence of removal and termination. - In the case of a targeted resignation from office to obtain general dismissal protection, § 242 BGB may become relevant in an individual case. - In the case decided, the claimant was no longer a corporate body of the defendant when the termination notice was received. - The termination was invalid due to a lack of social justification. ## Classification for companies and corporate office holders The decision makes clear that the chronological sequence of removal and termination can be of considerable importance for the application of the Kündigungsschutzgesetz. The decisive factor is not solely whether the contractual relationship originally stood in connection with a corporate office. Rather, what matters is whether the corporate office still existed when the termination notice was received. For companies, managing directors and senior executives with special contractual arrangements, the distinction between corporate office, service contract and employment relationship can have far-reaching consequences. MTR Legal Rechtsanwälte advises companies, investors and high-net-worth individuals on issues relating to corporate office relationships, terminations and employment-law contract structures. Further information can be found at [legal advice in employment law](https://www.mtrlegal.com/rechtsberatung/arbeitsrecht/).